Merkel says euro zone has bought itself time

Euro zone countries have bought themselves time to deal with the currency area's debt crisis and must now consolidate their public finances to secure the euro's future, German Chancellor Angela Merkel said on Friday.
Asked whether the euro zone crisis had abated, Merkel said a bailout for Greece and a safety net for the broader euro zone had relieved the immediate pressure.
"We've bought time for ourselves," she told RTL television in an interview.
After initial reluctance, Germany earlier this year agreed with its euro zone peers and the International Monetary Fund to the bailout for Greece. Berlin has since agreed to a 750 bln euro financial safety net.
Countries must now consolidate their budgets, Merkel said.
"This work must now be done over several years so that we can say 'the euro is secured for the long-term'," she added.
Merkel told RTL that reducing taxes for middle income wage earners was not a priority for her government at the moment — even though the Free Democrat coalition partners are pressing for such tax cuts.
"It's not a priority," she said.
She said that the government would take a closer look at value-added tax levels after the summer recess. "We'll look at the VAT rates in the autumn," she said.
Merkel said she was pleased that public support for budget consolidation appeared to be rising, based on opinion polls.
"The first thing now is consolidation and I'm pleased to see that the people are supporting that aim more and more," she said.
Merkel unveiled plans last month for 80 bln euros in budget cuts over the next four years — a package she hopes will bring Germany's structural deficit within European Union limits by 2013.
However, some members of her ruling coalition want the government to tone down the budget cut plans after party rebels forced a humiliating vote over the presidency this week.